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September 27, 1999

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IT Brings Manufacturers Closer To Customers

Manufacturing

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(CRN Enterprise Partner)Customers Linked In Manufacturing Chain

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To improve operational efficiency, each Cordant business unit is evaluating and selecting ERP packages independently to suit its particular needs. Huck Fasteners, Cordant's $500 million industrial fasteners division, is a year under way and farthest along with its implementation of Baan applications. When complete, eight plants will run on the software, which CIO Brad Stout expects will reduce operational overhead by eliminating multiple legacy systems and improve customer service with more data available at the point of sale. "It's a competitive necessity in manufacturing to run your operations on this type of software. You're at a disadvantage if you don't," says Stout. Legacy mainframe and manufacturing software don't have the depth of functionality Cordant needs, he adds.

Thiokol Propulsion and Howmet Investment Casting, Cordant's two other major divisions, are defining their own business cases and requirements for purchasing ERP suites. Cordant won't attempt to integrate the various systems, because autonomy outweighs the need for companywide sharing of data and software. "Each division must buy into the system that works best for them," Stout says.

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ERP and other packaged software that help a company put its operational house in order haven't permeated the companies that have installed them. According to one estimate, only 5% of the employees in most companies that have installed ERP use these enterprise systems. The next big wave manufacturers face will be to connect more people to such enterprise applications.

Harley-Davidson Inc. is riding that wave. The motorcycle and apparel manufacturer is piloting an intranet it calls Rapid Information Delivery and Exchange. The Web site, built with the help of integrator USWeb, gives employees access to general information such as events calendars, bulletin boards, and stock prices as well as information aimed at specific product groups. Harley-Davidson IT director Reid Engstrom says the company plans to extend the intranet next year to become a Web portal to the human-resources, manufacturing, and supply-chain applications from PeopleSoft, Oracle, and Manugistics deployed at Harley-Davidson.

Internet technology also provides new models of electronic collaboration in the areas of procurement, product development, and just-in-time product delivery. The Web provides a level of communication and integration between supply-chain partners not possible with private networks. "The borders of the enterprise are becoming more porous," says David Dobrin, an analyst at Benchmarking Partners, an IT consulting firm.

An example of collaborative product development using Internet technology can be found at Sonoco Products Corp., a $3 billion international supplier of industrial and consumer-goods packaging. The Hartsville, S.C., company is adding collaborative design features to a set of custom-developed Web applications that provide customers with product and account information. A new Java application, which will be pilot tested by year's end, will let Sonoco designers collaborate on package design over the Internet. For instance, one of its customers, General Mills Inc., could go to a Sonoco Web site to access packaging specifications for its Betty Crocker cake mixes and modify the dimensions of, or graphics on, a cake-mix box. The system would notify Sonoco product designers, who then would send confirmation by E-mail to General Mills. Sonoco CIO Bernie Campbell expects the exchange of design data and specifications over the Internet to accelerate delivery of products by eliminating an inefficient process now managed largely through faxing and phone calls.

Vendor-managed inventory, while not a new concept, is taking hold in companies that want to be more digitally integrated with customers. These inventory systems automate the replenishment of customers' supplies using direct Internet or EDI links to their inventory data and production schedules. When inventory falls below a designated level, the vendor initiates production and delivery of more goods.

3M Co., a $15 billion global manufacturer in St. Paul, Minn., has integrated its vendor-managed inventory system with supply-chain planning systems from i2 Technologies Inc. to synchronize production and delivery with customer demand. For example, when channel partners that sell to office-supply stores such as Office Max Inc. or Staples Inc. run low on Scotch tape and Post-It notes, 3M's vendor-managed inventory system triggers its distribution centers to send more stock. The transaction is simultaneously fed through EDI to i2 demand-planning systems, where it is used to develop forecasts for production planning.

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